## Who shipwrecked the economy?

 Quote by ThomasT Of course, but I don't think that's a reason not to regulate against fraud and abuse.
I agree, it just points out some of the limitations of regulations.

 Again, I agree. But I'm not sure what you're proposing as an alternative. Just not regulate against fraud and abuse? Or what?
I don't think there is any real solution. One can find numerous examples of where companies were extremely corrupt and cheated people because there were either no or too few regulations, and examples of where companies were extremely corrupt and cheated people through exploiting the regulations (even pushing for them for such reasons). As I've said, try to do light and efficient regulation for each industry, although some industries will need to be more regulated than others. Don't over-regulate any industry as that can limit competition.

 Is that a problem? If so, why?
Why would we want American companies to take their business to other countries? I'd prefer American businesses do business with American financial institutions, not say the Chinese or Europeans. Plus over the longer term, such a thing could cause another country to become the financial center of the world.

 That seems ok on first glance, but what do you mean by "more lightly regulate"? Didn't the recent financial crisis begin with smaller institutions making bad loans?
You can regulate all of them moreso than currently if needed, but leave the smaller institutions that are allowed to fail less regulated than the big institutions that would get a bailout.

 From what I read the Bush administration pulled hundreds of auditors/investigators from the oversight (ie., regulatory enforcement) of the bundling and sale/insurance of potentially toxic investments. Also, there were warnings given of a potential financial catastrophe, and the people doing the warning were marginalized (ie., discredited) by the Bush administration.
Haven't read that, but I do not know of any significant deregulation of the financial system that occurred under President Bush.

 The financial sector is still profiting. Afaik, it represents the largest growth sector in the American economy. From what I've read the US GDP and GNP are skewed because of the inordinate gains in the financial sector.
Sure it's profiting now, but it almost got taken out by the crisis. I do not see how it could skew the GDP because it is a section of the economy that has grown.

 But, apparently, it's not shrinking. It's growing.
Only if one looks at the statistics in a way to suit an agenda. Again remember, income quintiles do not represent fixed classes and wealth is the goods and services of society. As long as the regular folk continue to get access to more and more goods and services that they previously did not have access to, they are going to be wealthier. One could look at say the 1950s and 1960s and say that the wealth disparity was small, but yet, during that period of time, being wealthy gave one access to goods and services that an ordinary person could only dream about. In that sense, there was an enormous disparity. In modern times, a whole lot of goods/services that were previously available to the wealthy are now available to everyone, so in that sense, the wealth gap has closed.

Wake up 100 years from now and provided no major wars have destroyed Western civilization or anything, and the average person will have access to a whole bunch of goods and services that right now are only available to the wealthy, and a whole slew of additional goods and services that aren't available to anyone yet because they haven't even been created. The type of Internet they'll have, appliances, cars, healthcare available, etc...Now imagine someone then comes and says to you, "So you're from 100 years ago? Well not a whole lot has changed, the wealth gap is worse than ever now!" You'd reason, "Well by the standards of my time, you're extremely wealthy. It's just that society is unequally wealthy."

I believe society will eventually reach a point where the amount of goods and services available to the average person is so advanced that the differences in the quality of things like food, technology, healthcare, etc...available to a wealthy person versus an ordinary person, will be very minor. For example, at some point, they'll probably get where they can grow you a new organ or body part if you need one. But it will cost a whole lot and only be available to those with serious $. Give it enough time however and the technology will advance to where everyone can have a new bodypart grown if they need it. Things like that. So that is what I mean by the wealth gap will only continue to close. Financial assets-wise, we will always have "rich" and "poor."  Yes, I think that's how we have to objectively judge wealth, and therefore wealth disparity. I think trying to judge wealth disparity by financial assets can be very misleading, because it can give the impression that people are doing worse now than before, which is not necessarilly the case. It also can mistake that the "richest X% of society" is a class, as opposed to just a statistic. Wealth disparity in terms of financial assets will always exist in a free society because there are always people who will take the risk to build companies and create new products and services. In some periods this happens more then others.  This is, imo, a less objective measure of wealth disparity than referring to financial assets. I don't know if you were around in the 60's, but I was. Ok, there are computers and cell phones now which didn't even exist then. But, just from my personal experience (and I realize that this differs from region to region), one could live better on a basic wage than one can now. Iow, the cost of goods and services is proportionately greater now than it was in the 60's (with some upscale blips in the picture). So, as far as I can tell, the general trend is downward, wrt the majority of Americans. And again, my view might just be a bit unwarrentedly pessimistic. It depends. For certain goods and services, the prices have come down, as they are a lot more available to the masses now then they were before. For other good and services, their prices have increased some, but so have incomes per capita. What is hurting people right now are of course the recession and gas prices, and healthcare and education costs. Healthcare in particular eats into wages.  I don't know how you're guaging that. For example, when I was a mid-teenager in a rather large metropolitan area the minimum wage allowed me to rent an apartment in a nice area, make payments on a car, and eat out a few times a week, as well as covering all the other essentials. I don't think that's possible today ... anywhere. Many of the goods and services available to the wealthy back in the 1950s and 1960s are virtually all available to the middle-income and even the poor today, minus a few exceptions in terms of things that exist in such a limited supply that they could never be mass-produced (yachts, private jets, mansions, certain jewels, gold, etc...). Compare the difference in the standard of living of the average person versus a wealthy person in the 19th century to today. We still have "wealth disparity," but the goods/services available to the average person today have really closed up the actual disparity a good deal. A whole lot of stuff that one used to need to be rich to get access to, one now can get easily. Just as we see the massive difference in standard of living between a regular and wealthy 19th century person, a gap that is now very narrowed, 100 years from now, people will look back at the gap in standard of living between a regular and wealthy person of the 20th and 21st centuries and see that the gap has been closed even further. Also, one isn't supposed to live off of minimum wage.  In terms of just incomes, maybe. But this has to be related to prices. Historically, what was poor 50 years ago, in terms of buying power, is essentially what's poor today. But thanks to market capitalism, a whole slew of goods and services that used to cost a lot are now cheap and widely-available, so even a poor person today can buy all sorts of stuff that a poor person fifty years ago could not.  The trend is, afaik, that food prices continue to rise proportionately faster than wages and salaries. Food prices are partially-influenced by the government, as it pays farmers not to grow certain foods, part of the corn crop goes to ethanol, and also things like oil prices will drive up the price of groceries. Add to this wages that are stagnant or declining due to increasing healthcare costs.  Only if the small business is paying it's employees at around the minimum wage rate. Afaik, most small businesses either pay their employees at (significantly) above that rate, or they have an "off the books" labor force. If they hire teenagers who are part-time workers though, they will pay them at minimum wage.  Of course it would. Just look at the numbers. What I mean is let's say you get paid$1 per hour. So then you get a 100% increase to $2 per hour. Percentage-wise, you got a pretty huge increase, but in terms of the actual money, it doesn't really pay you enough to significantly change your buying power at this point.  I don't know. I'm just guessing. Lowering or raising the federal minimum wage to, say,$6/hour or \$12/hour would be an experiment, either way. But can there be any doubt that raising it would benefit minimum wage earners?
It would at the expense of a bunch of additional unemployed people if you raised it too high.

 Yes, that's a given. But my guess is that it would benefit the people receiving the wage, and the general economy, more than it would hurt the businesses paying the wage. As I mentioned in a previous post. Economists are split on this. It's an empirical question. So, we can either raise or lower the minimum wage and see what happens. But one thing we can know will happen is that that the buying power and living standard of millions of current minimum wage earners will decrease if the minimum wage is decreased.
Yes, but the buying power will be made up elsewhere through businesses having more money or more workers being employed.

 My guess is that there will be. So a discontinuance of government subsidies would have the net effect of decreasing the number of relatively poor applicants from attending college.
If the price came down, then it should not decrease the number of poor applicants from attending.

 What do you mean "it's one form of oversight". Afaik, it's the only form of oversight. Do you not regulate against fraud and abuse because of past corruption, or do you focus on cleaning up the corruption?
Regulation is one form of oversight. Other forms of oversight are consumer watchdog groups, ratings agencies (which failed in their duty), the press, etc...
 October 13, 2005 Congress passed bankruptcy legislation affecting repurchase agreements (repos). The legislation stated that mortgage-backed securities would become sole possesion of lenders in a repo in which the borrower defaulted on payment of the loan. Legislation similar to that which affected the repo market. November 10, 2005 the Federal Reserve announced that on March 26, 2006 they would no longer publish data on the M3 money supply...which includes data on what was then a rapidly growing repo market. Dun dun dun! Conspiracy? Did this lack of transparency in a shadow banking market lead to a collapse of the economy and did the Fed regret/know it? Sources: http://papers.ssrn.com/sol3/papers.c...act_id=1525120 http://www.federalreserve.gov/releases/h6/discm3.htm http://money.cnn.com/2005/10/17/pf/d..._law/index.htm http://www.newyorkfed.org/research/e.../0605garb.html http://www.newyorkfed.org/research/e.../1102morg.html